Why the Newcrest share price is rising on Red Chris acquisition news

The Newcrest Mining Limited (ASX: NCM) share price is up 3.3% to $25.30 this morning after the gold miner revealed it is to spend US$806.5 million to acquire a 70% join interest in the Red Chris copper/ gold mine and surrounding tenements in British Columbia, Canada.

The mining tenements acquired are estimated to have 20 million ounces of gold and 13 billion pounds of copper.

Newcrest’s managing director claimed its experience in developing Austrlia’s Cadia mines will be used to maximise the potential of the Red Hill assets and create “significant value” for the business.

The deal will be funded by Newcrest’s cash on hand and bank debt which totals more than US$3 billion, with investors pleased about the news given Newcrest’s share price rise this morning.

For the six months ending December 31 2019 Newcrest delivered an adjusted net profit after tax of $237 million on sales of $1,730 million. Prior to the deal net debt stood at $959 million on December 31 2019.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

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